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Letter Ruling 80-42: Massachusetts Industrial Finance Agency Bonds

You request our opinion with respect to the Massachusetts income tax treatment of interest income and income from the sale or exchange of bonds of the Massachusetts Industrial Finance Agency (MIFA).

The MIFA was created by Chapter 496 of the Acts of 1978. Section 35 of Chapter 496 states that the provisions of General Laws Chapter 40D shall apply to the bonds of the MIFA.

Section 20 of Chapter 40D states that: "[b]onds issued under this chapter, and any income therefrom, including any sale, exchange or transfer of such bonds, shall at all times be free from taxation".

Based on the foregoing it is ruled that:

(1) Interest on bonds of the MIFA is not subject to taxation under Chapter 62 of the General Laws.

(2) Gain or loss on the sale or exchange of bonds of the MIFA will not be recognized for purposes of taxation under Chapter 62 of the General Laws.

Technical Information Release 80-2 ("Income Tax Treatment of Interest and Gains on Certain Bonds"), issued April 11, 1980, inadvertently listed gain on bonds of the MIFA as "taxable". This will be corrected to read "exempt" when a revision of this TIR is issued.